Consumers start 2014 with £2,875 debt

New research also shows that 7% of consumers will owe more than £10,000 as they start the new year

According to the research, 44% will take over a year to pay off their credit card debt

Consumers will start the new year owing an average of £2,875 on their credit card, according to new research from uSwitch.

Moreover, when asked about their current debt levels, 7% of consumers said they owed more than £10,000, with 44% saying they will take over a year to clear their debts.

According to the research, over half of consumers who bought their Christmas presents on credit each spent an average of £418 in spite of recent warnings by the Bank of England that decent pay rises are unlikely until at least 2015.

Christmas debt hangover

Michael Ossei, personal finance expert at uSwitch believes that the hangover from Christmas 2013 is likely to make the prospect of a debt-free 2014 even harder for many consumers.

“While some families have done well to rein in their spending this Christmas, January can be a bleak time as people struggle to manage their debt,” Mr Ossei said.

“We are feeling the strain of rising living costs and stagnant salaries. Coupled with long-term debts to cope with, we could be in for a bumpy ride.”

However, Mr Ossei believes “now is the time for a financial makeover” as costs continue to outweigh consumers’ incomes.

Rail fares rise

The last few months of 2013 saw several energy price rises including a 9.2% increase from British Gas, and the start of 2014 has already seen rail fares rise by 3.1%.

A report by the Campaign for Better Transport, Fairs and Rail Financing, believes that the Government will be making a profit from passengers by the end of the next Parliament.

It also reveals that since 2008, the cost of a season ticket from Reading to London has risen 25%, whilst average take home pay has risen just 9%.

Stephen Joseph, chief executive at Campaign for Better Transport, said: “Rail fares have been rising faster than wages for a decade now, putting ever more strain on household costs.”

uSwitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website.